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The Honolulu Advertiser
Posted on: Sunday, September 22, 2002

Deals abound as tourism industry fights skimpy visitor arrivals

By Kelly Yamanouchi
Advertiser Staff Writer

Hawai'i visitor bookings have improved since the brief Sept. 11 anniversary slump, but many in the tourism industry say the next two months still could be among the year's slowest.

John and Marge Santa, center right, relaxed on Waikiki Beach near the Royal Hawaiian Hotel last week. The Santas divide their time between O'ahu and San Jose, Calif. Visitors are returning, but the industry hopes for more.

Eugene Tanner • The Honolulu Advertiser

State officials are forecasting that at this pace, while Hawai'i's tourism industry will outperform last year's, it has been set back so far that it is expected to draw the fewest visitors since 1994, when 6.4 million tourists poured $10.25 billion into the state's economy.

About 6.5 million visitors are projected to come to the Islands this year, about 221,000 more than last year, according to forecasts by the state Department of Business, Economic Development and Tourism. Still, that's projected to take a more than $400 million bite out of tourism revenue compared to the pace of the industry in 2000.

This year, the projection is for $10.49 billion — ahead of last year's $10.14 billion but behind 2000, when visitor expenditures brought in $10.9 billion.

The figures are a little surprise for an industry that has struggled to regain its footing since the 9/11 terrorist attacks. Many in the industry long knew that this September would be slow as families focused on a new school year, and economic worries and global political instability — including the threat of war with Iraq — caused more to stay closer to home.

But as the year winds to a close, many businesses also have begun a feverish effort to try to boost revenue as much as possible by ratcheting up discounts and other programs again.

Keith Vieira, senior vice president and area director of Starwood Hotels & Resorts, said his company's bookings for the end of this month have improved. But because the period around Sept. 11 was so weak, he said, "It will not be a good September."

For the rest of the year, turbulence, mixed signals and uncertainty in the tourism industry continue to vex businesses trying to plan for the future.

Thrifty Car Rental regional general manager Chris Curnan said reservations for October and November appear to be as much as 30 percent stronger than this month's. "It's been a roller coaster this whole year," but the fall is a little stronger than normal, Curnan said.

Corporate group travel, on the other hand, is not looking as positive, worrying experts because corporate travel is considered a good gauge of confidence in the economy.

Vieira said at least two large corporate groups from the Mainland have canceled trips for October and November.

Joseph Toy, president of hotel consulting company Hospitality Advisors LLC, said that "We certainly don't see corporate bookings returning."

Toy said he doesn't expect to see as large a drop-off in hotel stays for the rest of the year as the first six months after Sept. 11, 2001. But what is clear: "We'll still be subject to sharp swings in the market."

And going into the fall, businesses and analysts have found themselves in a strange position when searching for reasonable comparisons. Post-Sept. 11 travel last year reached historic lows, so comparisons with last year are skewed. Meanwhile, 1999 and 2000 were unusually strong, making it difficult to compare current figures with those years.

Ernest Watari, chairman and chief executive of PKF Hawaii LLP, predicts bookings will be up for the fall compared with last year, but that doesn't mean much. Compared with 2000 and 1999, bookings are down.

Typically, September through mid-December can be 15 to 20 percent slower than peak seasons, but Toy said this year there could be more than a 20 percent drop. Although Maui and Kaua'i have seen tourism improve, O'ahu hotel occupancy rates could go as low as the 60-percent range, compared with about 80 percent in a good market.

Dan Ilves, vice president of leisure marketing and sales for Travel Store in Los Angeles, said Hawai'i bookings at his travel agency were up this year through August. "I think a lot of people out here on the West Coast, instead of going to Europe or the Caribbean, choose to go to Hawai'i," he said. But the last couple of weeks have been significantly slower.

In an attempt to curb the swings and the effects of the traditional slow travel season — worsened by a damaged travel industry and a slow economy — hotels, airlines and others are offering big discounts and bonuses for travelers.

"I would expect we would see some competitive packages during the fall season, more than normal because of the economic downturn," Toy said.

Hawaiian Airlines is offering double mileage points on flights from San Diego to Honolulu this month through Oct. 31. Aloha Airlines has special fares for some flights from Burbank, Calif., and Vancouver, British Columbia.

Starwood has more promotions for its hotel rooms. Outrigger is offering one night free with certain stays through Dec. 18.

Hilton hotels in Hawai'i have package deals valid until Christmas. The Hyatt Regency Maui Resort & Spa is boosting its efforts to attract families and encourage repeat visitors with better service, new family activities and a renovation of the Renaissance Ilikai Waikiki hotel's wedding chapel to be completed this month.

Many hope to boost fall business with more kama'aina customers. The Royal Garden at Waikiki, for example, is offering special kama'aina rates until Dec. 19.

Tour organizer Pleasant Holidays said it has a two-for-one sale for tours and dinner shows in Hawai'i through Dec. 23, as well as automatic rental-car upgrades and free parking at some airports.

Smaller businesses also are feeling the pressure to reduce prices. Bill Star, owner of Original Glider Rides at Dillingham Air Field, said he has been offering $120 rides for $70, and that has helped to increase business.

"It's our way of making sure that we at least pay our bills," Star said. But it doesn't always bring in as much business as needed. On a good day, Star would take 15 to 20 customers on glider rides, but these days, he sometimes has fewer than seven.

"It's slowed down a bit more here after summer. We're not having the days we'd love to have," Star said. "We just have to put the piggy bank on hold."

Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@honoluluadvertiser.com.

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